Avista Corp. Reports Financial Results for First Quarter 2011

SPOKANE, WA -- (Marketwire) -- 05/06/11 -- Avista Corp. (NYSE: AVA) today reported net
income attributable to Avista Corp. of $41.9 million, or $0.73 per diluted
share, for the first quarter of 2011, compared to $28.8 million, or $0.52
per diluted share, for the first quarter of 2010.

'We had a very good first quarter, and we are off to a great start for the
year. The increase in our consolidated earnings was primarily due to an
increase in earnings at Avista Utilities because weather in the first
quarter of this year was significantly colder and wetter than in the first
quarter of 2010, which was one of the warmest January to March periods on
record in our service territory,' said Avista Chairman, President and Chief
Executive Officer Scott L. Morris.

'Weather conditions in the first quarter of 2011 were slightly colder than
average with precipitation, snowpack and streamflows well above average.
This resulted in a significant increase in retail loads and hydroelectric
generation as compared to the prior year, which increased operating
revenues and reduced our power supply costs. Retail loads for the first
quarter of 2011 were slightly higher than our expectations. In addition,
we have improved our recovery of utility operating costs and capital
investments through general rate increases that have gone into effect in
each of our jurisdictions since last October.

'We remain focused on increasing efficiencies in our operations to manage
our costs while offering a number of services and options to assist
customers with managing their energy usage and bills.

'Although our first quarter results reflect a significant improvement over
last year, on an annual basis we are still not earning the return
authorized by state utility commissions in each jurisdiction due to a
continuing lag in the recovery of capital investments and increasing
operating costs. We plan to file a general rate case in Washington in the
second quarter of 2011, and we continue to evaluate rate case plans in
Idaho.

'We are pleased that both Moody's and Standard & Poor's recently upgraded
our credit ratings. This is another sign of the progress we have made in
strengthening our financial condition. This lowers our current and future
interest costs, benefiting both shareholders and customers.

'We are confirming our 2011 earnings guidance with an expectation that we
will be at the high end of the range. However, it is early in the year,
and there are many variables that can impact our results such as
precipitation and temperatures for the remainder of the year,' Morris said.

Summary Results: Avista Corp.'s results for the first quarter of 2011 as
compared to the first quarter of 2010 are presented in the table below:

Net income for Avista Utilities for the first quarter of 2011 was
positively impacted by an increase in gross margin (operating revenues less
resource costs). This increase was primarily due to colder weather and
power supply costs that were below the amount included in base retail rates
in Washington, as well as general rate increases. The increase in gross
margin was partially offset by an increase in other operating expenses,
depreciation and amortization, and taxes other than income taxes.

The increase in net income for Advantage IQ for the first quarter of 2011
was primarily due to strong growth from energy management services,
moderate growth from expense management services, as well as the
acquisition of The Loyalton Group (Loyalton) effective December 31, 2010.

The improved results from the other businesses were due in part to
increased net income at METALfx and a net gain on investments of $0.1
million for the first quarter of 2011 compared to a net loss of $0.6
million for the first quarter of 2010.

Avista Utilities: Operating revenues increased $14.1 million and resource
costs decreased $11.5 million, which resulted in an increase of $25.6
million in gross margin. The gross margin on electric sales increased
$14.5 million and the gross margin on natural gas sales increased $11.1
million. The increase in electric gross margin was due to colder weather
that increased retail loads, general rate increases and power supply costs
below the amount included in base retail rates. During the first quarter
of 2011, we recognized a benefit of $4.9 million under the Energy Recovery
Mechanism (ERM) in Washington compared to an expense of $1.2 million for
the first quarter of 2010. The increase in our natural gas gross margin
was primarily due to colder weather that increased retail loads and
partially due to general rate increases.

Retail electric revenues increased due to an increase in use per customer
as a result of colder weather and the impact of general rate increases.
Residential electric use per customer increased 11 percent and commercial
use per customer increased 3 percent compared to the first quarter of 2010.

Wholesale electric revenues decreased due to a decrease in sales volumes
and sales prices. The decrease in sales volumes was primarily due to
decreased wholesale power optimization and higher than expected retail
sales caused by colder weather.

When electric wholesale market prices are below the cost of operating our
natural gas-fired thermal generating units, we sell the natural gas
purchased for generation in the wholesale market as sales of fuel. Sales
of fuel increased due to an increase in thermal generation resource
optimization and lower usage of our thermal generation plants. This was
due in part to increased hydroelectric generation.

The increase in retail natural gas revenues was due to an increase in
volumes and higher retail rates. We sold more retail natural gas in the
first quarter of 2011 as compared to the first quarter of 2010 primarily
due to colder weather. Residential natural gas use per customer increased
20 percent and commercial use per customer increased 22 percent compared to
the first quarter of 2010. The increase in retail rates reflects purchased
gas adjustments, as well as general rate increases.

The decrease in our wholesale natural gas revenues reflects a decrease in
prices and volumes. Wholesale sales reflect the sale of natural gas in
excess of load requirements as part of the natural gas procurement and
resource optimization process. Additionally, we engage in optimization of
available interstate pipeline transportation and storage capacity through
wholesale purchases and sales of natural gas. With higher retail loads in
2011 as compared to 2010, we had less opportunity to optimize
transportation resources. Differences between revenues and costs from
sales of resources in excess of retail load requirements and from resource
optimization are accounted for through the PGA mechanisms.

Advantage IQ: Advantage IQ's revenues for the first quarter of 2011
increased 22 percent as compared to the first quarter of 2010 and totaled
$29.2 million. The increase in revenues was primarily due to strong growth
from energy management services, moderate growth from expense management
services, and the acquisition of Loyalton.

In the first quarter of 2011, Advantage IQ managed bills totaling $4.8
billion, an increase of $0.7 billion, or 18 percent, as compared to the
first quarter of 2010. The increase was due to an increase in both the
average value of each bill processed and the number of accounts managed.
Advantage IQ had a 6 percent increase in the number of accounts managed for
the first quarter of 2011.

In April 2011, Advantage IQ entered into a new $40 million three-year
committed line of credit agreement that replaced its $15 million committed
credit agreement that had an expiration date of May 2011.

Other Businesses: Operating revenues decreased $5.3 million and operating
expenses decreased $5.7 million for the other businesses. The decrease in
operating revenues and operating expenses was primarily due to the
assignment of the Lancaster power purchase agreement to Avista Corp. in
December 2010. The improvement in results for these businesses was due in
part to increased earnings at METALfx, which had net income of $0.3 million
for the first quarter of 2011 compared to close to break-even for the first
quarter of 2010.

Liquidity and Capital Resources: In February 2011, we entered into a new
committed line of credit in the total amount of $400 million with an
expiration date of February 2015 that replaced our $320 million and $75
million committed lines of credit that had an expiration date of April 5,
2011. As of March 31, 2011, we had $313 million of available liquidity
under our committed line of credit.

Subject to market conditions, we are planning to cause the redemption of
$83.7 million of Pollution Control Bonds and the refunding thereof with new
bond issues in 2011. We are currently the holder of all bonds to be
redeemed and refunded and, accordingly, would receive the redemption
proceeds.

We are party to a sales agency agreement under which we sell shares of our
common stock from time to time. In the first quarter of 2011, we sold
255,000 shares for a total of $5.8 million. As of March 31, 2011, we had
0.8 million shares available to be issued under this agreement.

We expect to issue up to $25 million of common stock in 2011 (including
first quarter issuances) in order to maintain our capital structure at an
appropriate level for our business.

Utility capital expenditures were $50 million for the first quarter of
2011. We expect utility capital expenditures to be about $250 million for
the full year of 2011. Actual capital expenditures may vary from our
estimates due to factors such as changes in business conditions,
construction schedules and environmental requirements.

Earnings Guidance and Outlook

Based on our results for the first quarter, which were above our
expectations, and our forecast for the remainder of the year, we are
expecting to be at the high end of our consolidated and utility earnings
guidance range. It is important to note that we are still early in the
year. We expect consolidated earnings to be in the range of $1.60 to $1.80
per diluted share for 2011.

We expect Avista Utilities to contribute in the range of $1.47 to $1.62 per
diluted share for 2011. We expect our 2011 utility earnings growth to be
limited by several factors including: slow load growth due to economic
conditions; continued lag in the recovery of our operating expenses and
capital investments; and increased operating and maintenance costs,
including generation plant major maintenance expenses, and pension and
medical costs. Our range for Avista Utilities encompasses expected
variability in power supply costs and the application of the ERM to that
power supply cost variability. The midpoint of our utility guidance range
does not include any benefit or expense under the ERM. However, we are
expecting a benefit under the ERM in 2011 within the 90 percent customer/10
percent company sharing band based on actual results for the first quarter
and our forecast for the remainder of the year. The forecast of our
position in the ERM can vary significantly due to a variety of factors
including the level of hydroelectric generation and retail loads, as well
as changes in purchased power and natural gas fuel prices. Our outlook for
Avista Utilities assumes, among other variables, normal precipitation and
temperatures for the remainder of 2011.

We expect Advantage IQ to contribute in the range of $0.13 to $0.16 per
diluted share for 2011 and the other businesses to be between break-even
and a contribution of $0.02 per diluted share.

NOTE: We will host a conference call with financial analysts and investors
on May 6, 2011, at 10:30 a.m. ET to discuss this news release. The call is
available at (866) 783-2141, Pass code: 47720905. A simultaneous webcast
of the call is available on our website, www.avistacorp.com. A replay of
the conference call will be available through May 13, 2011. Call (888)
286-8010, Pass code 78542679, to listen to the replay.

Avista Corp. is an energy company involved in the production, transmission
and distribution of energy as well as other energy-related businesses.
Avista Utilities is our operating division that provides electric service
to 358,000 customers and natural gas to 319,000 customers. Our service
territory covers 30,000 square miles in eastern Washington, northern Idaho
and parts of southern and eastern Oregon, with a population of 1.5 million.
Avista's primary, non-regulated subsidiary is Advantage IQ. Our stock is
traded under the ticker symbol 'AVA.' For more information about Avista,
please visit www.avistacorp.com.

Avista Corp. and the Avista Corp. logo are trademarks of Avista
Corporation.

The attached condensed consolidated statements of income, condensed
consolidated balance sheets, and financial and operating highlights are
integral parts of this earnings release.

This news release contains forward-looking statements, including statements
regarding our current expectations for future financial performance and
cash flows, capital expenditures, financing plans, our current plans or
objectives for future operations and other factors, which may affect the
company in the future. Such statements are subject to a variety of risks,
uncertainties and other factors, most of which are beyond our control and
many of which could have significant impact on our operations, results of
operations, financial condition or cash flows and could cause actual
results to differ materially from those anticipated in such statements.

The following are among the important factors that could cause actual
results to differ materially from the forward-looking statements: weather
conditions (temperatures and precipitation levels) and their effects on
energy demand and electric generation, including the effect of
precipitation and temperatures on the availability of hydroelectric
resources, the effect of temperatures on customer demand, and similar
impacts on supply and demand in the wholesale energy markets; the effect of
state and federal regulatory decisions on our ability to recover costs and
earn a reasonable return including, but not limited to, the disallowance of
costs and investments, and delay in the recovery of capital investments and
operating costs; changes in wholesale energy prices that can affect, among
other things, the cash requirements to purchase electricity and natural
gas, the value received for sales in the wholesale energy market, the
necessity to request changes in rates that are subject to regulatory
approval, collateral required of us by counterparties on wholesale energy
transactions and credit risk to us from such transactions, and the market
value of derivative assets and liabilities; global financial and economic
conditions (including the impact on capital markets) and their effect on
our ability to obtain funding at a reasonable cost; our ability to obtain
financing through the issuance of debt and/or equity securities, which can
be affected by various factors including our credit ratings, interest rates
and other capital market conditions; economic conditions in our service
areas, including the effect on the demand for, and customers' payment for,
our utility services; the potential effects of legislation or
administrative rulemaking, including the possible adoption of national or
state laws requiring our resources to meet certain standards and placing
restrictions on greenhouse gas emissions to mitigate concerns over global
climate changes; changes in actuarial assumptions, interest rates and the
actual return on plan assets for our pension plan, which can affect future
funding obligations, pension expense and pension plan liabilities;
volatility and illiquidity in wholesale energy markets, including the
availability of willing buyers and sellers, and prices of purchased energy
and demand for energy sales; unplanned outages at any of our generating
facilities or the inability of facilities to operate as intended; the
outcome of pending regulatory and legal proceedings arising out of the
'western energy crisis' of 2000 and 2001, and including possible refunds;
the outcome of legal proceedings and other contingencies; changes in, and
compliance with, environmental and endangered species laws, regulations,
decisions and policies, including present and potential environmental
remediation costs; wholesale and retail competition including, but not
limited to, alternative energy sources, suppliers and delivery
arrangements; the ability to comply with the terms of the licenses for our
hydroelectric generating facilities at cost-effective levels; natural
disasters that can disrupt energy generation, transmission and
distribution, as well as the availability and costs of materials,
equipment, supplies and support services; explosions, fires, accidents, or
mechanical breakdowns that may occur while operating and maintaining our
generation, transmission and distribution systems; blackouts or disruptions
of interconnected transmission systems; disruption to information systems,
automated controls and other technologies that we rely on for operations,
communications and customer service; the potential for terrorist attacks,
cyber security attacks or other malicious acts, that cause damage to our
utility assets, as well as the national economy in general; including the
impact of acts of terrorism, cyber security attacks or vandalism that
damage or disrupt information technology systems; delays or changes in
construction costs, and/or our ability to obtain required permits and
materials for present or prospective facilities; changes in the long-term
climate of the Pacific Northwest, which can affect, among other things,
customer demand patterns and the volume and timing of streamflows to our
hydroelectric resources; changes in industrial, commercial and residential
growth and demographic patterns in our service territory or the loss of
significant customers; the loss of key suppliers for materials or services;
default or nonperformance on the part of any parties from which we purchase
and/or sell capacity or energy; deterioration in the creditworthiness of
our customers and counterparties; the effect of any potential decline in
our credit ratings, including impeded access to capital markets, higher
interest costs, and certain covenants with ratings triggers in our
financing arrangements and wholesale energy contracts; increasing health
care costs and the resulting effect on health insurance provided to our
employees and retirees; increasing costs of insurance, more restricted
coverage terms and our ability to obtain insurance; work force issues,
including changes in collective bargaining unit agreements, strikes, work
stoppages or the loss of key executives, availability of workers in a
variety of skill areas, and our ability to recruit and retain employees;
the potential effects of negative publicity regarding business practices,
whether true or not, which could result in, among other things, costly
litigation and a decline in our common stock price; changes in
technologies, possibly making some of the current technology obsolete;
changes in tax rates and/or policies; and changes in our strategic business
plans, which may be affected by any or all of the foregoing, including the
entry into new businesses and/or the exit from existing businesses.

For a further discussion of these factors and other important factors,
please refer to our Annual Report on Form 10-K for the year ended Dec. 31,
2010. The forward-looking statements contained in this news release speak
only as of the date hereof. We undertake no obligation to update any
forward-looking statement or statements to reflect events or circumstances
that occur after the date on which such statement is made or to reflect the
occurrence of unanticipated events. New factors emerge from time to time,
and it is not possible for management to predict all of such factors, nor
can it assess the impact of each such factor on our business or the extent
to which any such factor, or combination of factors, may cause actual
results to differ materially from those contained in any forward-looking
statement.

Related news

U.S. Environmental Protection Agency officials refused for weeks to share water-quality data with their state counterparts following a blowout of toxic wastewater from a Colorado mine that fouled rivers across the Southwest, New Mexico`s top environmental regulator testified Thursday.
The move by federal agencies aimed to downplay the severity of the spill, hobbling the state`s response to the high levels of arsenic, lead and other contaminants involved in the spill, New Mexico Secretary of Environment Ryan...

United Nations Under-Secretary-General and UNEP Executive Director Achim Steiner released the following statement after the UN General Assembly adopted its first-ever resolution on wildlife trafficking:
"This General Assembly resolution is an historic step forward, and one I believe will spark the firm and concerted international action needed to combat poaching and those who profit from it.
"In calling for wildlife crime to be treated as a serious crime, both nationally and across borders, the resolution sends...

From the valuation of ecosystem services in El Salvador and Panama and the restoration of nearly 60 hectares of critical orangutan habitat in Indonesia to the use of conflict resolution to raise community support for conservation in the Democratic Republic of the Congo (DRC), the Spain-UNEP LifeWeb initiative finds that better financing, community empowerment, monitoring, and law enforcement are key to the protection of endangered species and habitat conservation across Protected Areas.
The project was established...

The Eleventh Meeting of the Conference of the Parties (COP) to the Convention on the Conservation of Migratory Species of Wild Animals (CMS) concluded today after six days of intense negotiations aiming to establish conservation actions for the benefit of the world`s migratory species for the coming years.
The Conference, held in Latin America for the first time, attracted over 900 delegates - a record for the CMS - representing Parties, non-Parties, IGOs, NGOs and the media, together with a large number of...

The European Commission is referring the Netherlands to the European Court of Justice over its failure to enact EU legislation on the protection of animals used for scientific purposes. The EU rules, which should have been enacted into national law by November 2012, aim to minimise the number of animals used in experiments, and require alternatives to be used where possible. The legislation also lays down minimum standards for housing and care of animals, and regulates their use, taking into consideration...

Customer comments

No comments were found for Avista Corp. Reports Financial Results for First Quarter 2011 . Be the first to comment!